Microsoft 2012 Annual Report Download - page 69

We have operating leases for most U.S. and international sales and support offices and certain equipment. Rental
expense for facilities operating leases was $639 million, $525 million, and $530 million, in fiscal years 2012, 2011, and
2010, respectively. Future minimum rental commitments under noncancellable facilities operating leases in place as of
June 30, 2012 are as follows:
(In millions)
Year Ending June 30,
2013
$
527
2014
421
2015
327
2016
223
2017
164
Thereafter
315
Total
$
1,977
Indemnifications
We provide indemnifications of varying scope and size to certain customers against claims of intellectual property
infringement made by third parties arising from the use of our products and certain other matters. We evaluate estimated
losses for these indemnifications, and we consider such factors as the degree of probability of an unfavorable outcome
and the ability to make a reasonable estimate of the amount of loss. To date, we have not encountered significant costs
as a result of these obligations and have not accrued any liabilities related to these indemnifications in our financial
statements.
Yahoo! Commercial Agreement
On December 4, 2009, we entered into a 10-year agreement with Yahoo! Inc. (“Yahoo!”) whereby Microsoft will provide
the exclusive algorithmic and paid search platform for Yahoo! websites. Microsoft provided Yahoo! with revenue per
search guarantees for a period of 18 months after implementation of the Microsoft search ads platform in each country,
extended by an additional 12 months for the U.S. and Canada. These guarantees are calculated, paid, and adjusted
periodically and are rate guarantees, not guarantees of search volume. We estimate the remaining cost of the revenue
per search guarantees during the guarantee period could range up to $120 million.
NOTE 17 — CONTINGENCIES
Antitrust, Unfair Competition, and Overcharge Class Actions
A large number of antitrust and unfair competition class action lawsuits were filed against us in various state, federal, and
Canadian courts on behalf of various classes of direct and indirect purchasers of our PC operating system and certain
other software products between 1999 and 2005. We obtained dismissals or reached settlements of all claims made in the
United States.
All settlements in the United States have received final court approval. Under the settlements, generally class members
can obtain vouchers that entitle them to be reimbursed for purchases of a wide variety of platform-neutral computer
hardware and software. The total value of vouchers that we may issue varies by state. We will make available to certain
schools a percentage of those vouchers that are not issued or claimed (one-half to two-thirds depending on the state).
The total value of vouchers we ultimately issue will depend on the number of class members who make claims and are
issued vouchers. The maximum value of vouchers to be issued is approximately $2.7 billion. The actual costs of these
settlements will be less than that maximum amount, depending on the number of class members and schools that are
issued and redeem vouchers. We estimate the total cost to resolve all of the state overcharge class action cases will
range between $1.9 billion and $2.0 billion. At June 30, 2012, we have recorded a liability related to these claims of
approximately $500 million, which reflects our estimated exposure of $1.9 billion less payments made to date of
approximately $1.4 billion mostly for vouchers, legal fees, and administrative expenses.